New research suggests that changes in the housing market could make it an ideal time to carry out estate planning, according to a legal expert.
The Centre for Economics and Business Research (CEBR) has predicted that house prices will continue to fall this year, ending the year 1.4 per cent lower than in January – but that the property market will stabilise towards the end of the year.
House prices are then expected to rise by 16 per cent by 2015. However, the Inheritance Tax (IHT) threshold has been frozen until 2015 which means the IHT threshold is effectively dropping.
In the view of John Rouse, partner in the wills, trust and tax department at Midland law firm Wright Hassall, this presents people with a good opportunity to arrange their assets.
He said: “In order to offset the reducing IHT threshold in real terms, now is the perfect time to start estate planning.
“This is because assets such as property and investments should increase in value and any such increases could then lead to additional Inheritance Tax being payable.
“In light of this, one of the main areas worth looking at is making maximum use of the current low values of property to your advantage.
“This can be done by structuring property in certain ways with regards to tax or being gifted to children so that they inherit the property at a low value.
“For Capital Gains Tax (CGT) purposes, now is also a good time to transfer assets to children with either no CGT or a very small tax liability.
“Whichever way you want to go about it, now is the time to seek advice on the issue and use current circumstances to your advantage.
“Property prices have been in the doldrums. Hopefully this will change as the economy comes out of recession but planning now can help reduce the unwanted side effects of increasing property values.”
